Air Force's $26.4M flight test support contract awarded to Lockheed Martin raises value concerns

Contract Overview

Contract Amount: $26,401,186 ($26.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2007-11-30

End Date: 2009-10-31

Contract Duration: 701 days

Daily Burn Rate: $37.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CY08/CY09 BASELINE FLIGHT TEST SUPPORT

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $26.4 million to LOCKHEED MARTIN CORPORATION for work described as: CY08/CY09 BASELINE FLIGHT TEST SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Performance period spans two fiscal years, indicating a medium-term need. 3. Engineering services category suggests a focus on technical expertise. 4. The contract's value is moderate within the broader defense sector. 5. Lack of competition may lead to suboptimal pricing for taxpayers. 6. Cost-plus-fixed-fee structure can incentivize cost overruns.

Value Assessment

Rating: questionable

The $26.4 million contract for flight test support was awarded to Lockheed Martin without competition. Benchmarking value is difficult due to the sole-source nature. However, cost-plus-fixed-fee contracts, while providing flexibility, can sometimes lead to higher costs compared to fixed-price arrangements if not closely managed. The absence of competitive bids means there's no direct market comparison to assess if the pricing is optimal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin, was solicited. The lack of competition prevents a robust price discovery process. Without multiple proposals, it's challenging to ascertain the most cost-effective solution or if the government received the best possible price.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding, potentially leading to higher overall expenditure for this service.

Public Impact

The primary beneficiary is the Department of the Air Force, receiving essential support for flight testing operations. Services delivered include critical engineering and technical support for flight test programs. The geographic impact is centered in Texas, where the contractor is located. Workforce implications include employment for engineers and technical specialists involved in defense testing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type may not be the most cost-efficient.
Limited transparency into the justification for sole-source award.

Positive Signals

Award to an incumbent contractor may ensure continuity of essential services.
Engineering services are critical for maintaining advanced aerospace capabilities.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically supporting research, development, testing, and evaluation (RDT&E) activities. The market for specialized flight test support is often concentrated among a few large defense contractors. The $26.4 million value is moderate for a defense contract of this nature, but the lack of competition is a key characteristic.

Small Business Impact

The contract data indicates no specific small business set-aside. Given the sole-source nature and the prime contractor being Lockheed Martin, it is unlikely that small businesses would be directly involved as prime contractors. Subcontracting opportunities for small businesses would depend on Lockheed Martin's internal procurement practices and the specific needs of the flight test support services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the terms of the cost-plus-fixed-fee contract, including performance milestones and reporting requirements. Transparency is limited due to the sole-source award, with the justification for this approach being a key area for scrutiny.

Related Government Programs

Air Force Flight Test Support
Aerospace Engineering Services
Defense R&D Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.4 million to LOCKHEED MARTIN CORPORATION. CY08/CY09 BASELINE FLIGHT TEST SUPPORT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $26.4 million.

What is the period of performance?

Start: 2007-11-30. End: 2009-10-31.

What is the specific justification for awarding this contract on a sole-source basis to Lockheed Martin?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified when only one responsible source can provide the required supplies or services, such as when there is a unique capability, a critical need for compatibility with existing systems, or in cases of urgent and compelling circumstances. Without this justification, it is difficult to assess the necessity of foregoing competition and its impact on value for money. Further investigation into the contract file and associated documentation would be required to understand the rationale behind this decision.

How does the cost-plus-fixed-fee (CPFF) contract type compare to other pricing arrangements for similar flight test support services?

Cost-plus-fixed-fee (CPFF) contracts are often used when the scope of work is not precisely defined or when there is uncertainty in the costs involved, such as in research and development or complex engineering services like flight testing. This structure allows the contractor to recover allowable costs plus a predetermined fixed fee. While it offers flexibility and can encourage innovation, it carries a higher risk of cost overruns compared to fixed-price contracts, as the government bears the brunt of cost increases. For flight test support, if the requirements are well-defined, a fixed-price incentive fee or even a firm-fixed-price contract might offer better value by incentivizing cost control, assuming adequate competition exists to establish a fair price.

What is Lockheed Martin's track record with the Department of Defense for similar engineering and flight test support services?

Lockheed Martin Corporation is a major defense contractor with extensive experience providing a wide range of engineering, research, development, and support services to the Department of Defense (DoD) and other government agencies. They have a long history of involvement in complex aerospace programs, including flight testing for various platforms. While specific performance metrics for this particular contract are not detailed, Lockheed Martin generally possesses the technical capabilities and infrastructure required for such services. However, past performance on other contracts, including any issues related to cost, schedule, or quality, would be a critical factor in a comprehensive assessment of their suitability and value proposition.

What are the potential risks associated with a sole-source award for critical flight test support?

The primary risk associated with a sole-source award for critical flight test support is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to optimize efficiency or innovate. Taxpayers may end up paying more than necessary for the services. Additionally, it can create a dependency on a single provider, potentially limiting future flexibility or access to alternative solutions. Without competition, there's also less transparency into the market rate for such services, making it harder to benchmark performance and cost-effectiveness. This can also stifle innovation from other potential providers who are not given an opportunity to compete.

How does this contract's value compare to historical spending on flight test support by the Air Force or DoD?

The $26.4 million contract value for CY08/CY09 baseline flight test support is a moderate expenditure within the context of the Department of Defense's overall budget. The Air Force, in particular, invests billions annually in RDT&E and sustainment activities, which often include extensive flight testing. To provide a precise comparison, one would need to analyze historical spending data for similar flight test support contracts, considering factors like contract duration, scope of services, and inflation. However, given the sole-source nature and the CPFF structure, this contract's value might be higher than if it had been competitively procured. Without comparative data, it's difficult to definitively state if this represents an outlier or a typical expenditure for such services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1 LOCKHEED BLVD, FORT WORTH, TX, 76108

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $27,171,608

Exercised Options: $27,171,608

Current Obligation: $26,401,186

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F4262001D0058

IDV Type: IDC

Timeline